captioning sponsored by macneil/lehrer productions >> lehrer: good evening. i'm jim lehrer. major indexes on wall street lost more than 2% of value over concerns about the strength of the u.s. economy. >> ifill: and i'm gwen ifill. on the "newshour" tonight: neil irwin of the "washington post" and tom hudson of "nightly business report" look at today's drop and at the federal reserve's acknowledgement that the recovery has slowed. >> lehrer: then, newshour political editor david chalian translates the results of yesterday's primaries and other political news. >> ifill: tom bearden reports on what became of the oil that was scooped and skimmed out of the gulf of mexico.

>> this is just one of a whole series of sites all across the gulf coast where contractors are trying to clean up the mess left behind by the b.p. oil spill. >> lehrer: united nations emergency official john holmes updates the flooding disaster in pakistan that has affected at least 14 million people. >> ifill: spencer michels' reports on cyber conflict continue. tonight, a conversation with former cia and national security agency director michael hayden. >> we've created this new domain, this new space called cyber and frankly, it's lawless. there are no natural technical >> lehrer: and paul solman explores the connection between greek food and the country's economic problems. that's all ahead on tonight's "newshour." major funding for the pbs newshour has been provided by:

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thank you. >> lehrer: markets fell sharply today amid fears that a global recovery may be stalling. it was the worst day for wall street in more than a month. all three of the major stock indexes dropped by at least 2% into negative territory for the year. more than 2,600 stocks on the new york stock exchange lost ground today. the dow jones industrial average closed down 265 points at 10,378. the nasdaq fell more than 68 points to close at 2,208. jeffrey brown has more about the drop and the numbers that set it off. >> brown: stocks began falling this morning after investors took a closer look at the federal reserve's latest projections that the economic recovery is weakening. in a statement issued yesterday,

fed officials wrote, "the pace of recovery in output and employment has slowed in recent months." growth, the statement said, is being held back by "high unemployment, modest income growth, lower housing wealth, and tight credit." in addition: "bank lending has continued to contract." today, the fed announced an initial response: saying it would buy $18 billion worth of long-term government securities. the aim: hold down interest rates, making it cheaper for consumers and businesses to borrow money. this afternoon, president obama tried to talk up one of the bright spots of the past few months-- increasing numbers of manufacturing jobs following a long plunge during the recession. >> so overall, manufacturing sector added 183,000 jobs this year. that's the strongest seven months in more than a decade. instead of plants leaving

america, we are started to see the opposite. a growing number of firms hiring here at home. we are not yet where we need to be, but good trend out there. we can't let up, move forward. >> brown: the presidents remarks and the fed's report come after a disappointing jobs report last friday. and for a closer look at all this, we're joined by: neil irwin, who covers the fed and economics for the washington post. he joins us tonight from chicago. and from miami: tom hudson, co- anchor of the "nightly business report" on pbs. tom, so the fed puts out just a few paragraphs yesterday, and, markets clearly did not like it today. what did they see? fill in the picture for us. >> well, what they saw were concerns building in china and elsewhere about the global economy continuing to hilt the brakes. the chinese markets continue to try to price in a slower economy over

there. that's awfully important for u.s. exporters. andry thinking the federal reserve assessment of the economy through the end of the year has certainly shareholders and the stock markets worried as we see lots of folks piling into the resk-off trade, and that meant buying u.s. government bonds ahead of what the federal reserve has promised to do as you detailed earlier. >> brown: now, neil irwin, what seemed to get people's attention was-- in part at least-- was a perceived change in direction by the fed. explain that. >> that's right. what -- for last year or so, the fed has been in exit strategy mode. they've been talking and thinking about how to remove all the supports they put in place for the economy, all the actions they took during the crisis, and, you know, letting programs expire, that sort of thing. this is a reversal. it's a small reversal, but it's a reversal, nonetheless, and what they're door, as you mentioned, buying $18 billion in securities, and buying at a slow pace. part of what was going on in the markets today, people in the markets would like to see more. people in the stock market

always want to see the fed doing more to prop up growth, and they would like to see more large-scale asset purchase than the fed is willing to do at this stage. >> brown: neil, explain more about what the fed is doing. for a long time we talked about the notion that the fed has little room to do anything because interest rates are already so low. it gets a little complicated but what are the mechanics here of the actions they take and how it has an impact on the economy. >> because the fed's normal policy-- normally what they do to manage the economy is they raise or lower their target for short-term interest rates. that's already at zero. they can't cut it any further so they have to turn to other tools. what those have meant is buy long-term securities, mortgage-backed securities, treasury, bonds, increasing the money supply and reducing long-term interest rates, and what it costs to get a mortgage and for a corporation to borrow money so it does have an effect on long-term rates. it's an

unventional move. it's not clear exactly what the effects are, how effective it is. you want to be very cautious with these approaches and not undertake them lightly. it would take real worsening in the economic outlook for them to do large-scale asset purchases like they were doing a year ago. >> brown: tom, i would like to dig into one of the things the fed brought up because it's been a persistent issue and problem and that's the bank lending and the tight credit issue. what-- how do you explain it? is it a supply problem, a demand problem? businesses , banks? parse the equation for us. what do you see? >> well, the banks will tell you it's a demand problem. they'll say they've got plenty of dry powder, plenty of cash ready to end into a market, assuming that there are people and businesses asking for it, and by the way, those businesses and people need to be qualified, need to be high-credit quality for the banks in order to lend that money. now, you talk to small-business people and some consumers who may be of questionable

credit quality saying they'd love to go to a bank to get the money but they don't feel confident they will get the money. it's supply and demand contradiction at this point and, really, it's unclear from the market perspective, we saw it articulated today with the 2% sell-off, that investors really remain unconvinced that the federal reserve's actions are going to matriculate down to loosening up the credit and increasing the velocity of money and putting dollars into the pockets of consumers and into the pockets of companies to spend them in the economy. >> brown: staying with you, tom, that issue of lending practices is a direct consequence of what we've been through the past couple of years, right-- a question of who gets loans and who qualifies? >> it's a direct consequence what we've been through, no doubt. but we have to remember, 24 months ago our standards of credit quality were much different than historically what we have been at. the banks will tell you their credit standards have, perhaps, reverted back to where they were

before the credit boom days of 2003-2007. been we were used to very easy credit and being able to get a 30-year, no-income-stated home mortgage with a 500 fica credit score. those days are long gone. instead we reverted back to normal credit standards and considering what we've been through the last several years, it seems like it's very tight. >> brown: neil irwin, what's your analysis of the credit and bank lending issue? >> tom hit a lot of the important issues. the thing is, it takes two to have a loan. it's not just that banks are unwilling to lend-- though they are being more cautious. it's that businesses are looking around. they don't see great investment opportunities. they don't have the confidence to buy more equipment or build a new factory. so there is a reluctance on the part of businesses to apply for a loan or take out a loan right now. it clearly goes both ways. even though there might be some banks in fine financial shape and ready and willing to make lones again, there are other banks, especially smaller ones around the

country, are still under the weight that they're not sure whether they'll get paid back and while they have the uncertainty they're not willing to take the risk of making new loans. so that's hanging over the economic recovery. >> brown: neil, that ties to the jobs picture, right, too, because the businesses are loathe to hire. >> right, a business that can't borrow money or can't borrow money to build a new factory can't hire employees to for the factory. >> brown: tom hudson are, their implications here-- and i mean in the fed action specifically-- for the rest of us, not the business and the banks, but consumers. >> well, there are implications for those consumers out there who -- who are credit worthy, in the eyes of bankers these days. for those who are in the housing market , or in the credit-- the consumer credit market looking for i.o.u.s, looking to borrow money, what the federal reserve action that it announced

yesterday and is going to kind of real off the next several months likely means lower cost of loans, lower interest rates which, clearly, is going to be a good thing if you're interested in that money and if you can qualify for it. >> brown: neil irwin, there is one potential down side, i think, that was noticed in the fed action which is the fear that it makes it easier for borrowing and , including the government to borrow. >> yeah, what's happened is the entire strategy is to try to lower rates. the truth is, interest rates are already really, really low in the united states. the u.s. government can borrow more money more cheaply than at almost any time in its history. on the one hand that's a good things keeping rates low for expurmz business and making it easier for the government to finance its debt. but it can't last and probably won't last forever. >> brown: tom hudson, your last word on that. that feeds into inflation and what we're hearing about deflation. >> a lot of talk about whether or not we're going

to enter a deflationary spiral. in fact, we've seen a regional federal reserve bank president in fact mention that "d" word in the last week or two, deflation, something that would have been unheard of a couple of years ago to hear from a federal reserve regional bank president. i think long term the question remains with all of this cash being flooded into the u.s. economy-- and really that means the global economy-- it can only but perhappens stoke the fires of inflation longer term and that's where you really have to pay attention to market interest rates-- not the federal reserve interest rate but what the bond market is telling us, and right now, at least, there's no concerns about short-term inflation, but that could turn on a dime. >> brown: all right, tom hudson of the "nightly business report" neil irwin of the "washington post." thanks both very much. >> thank you. >> thank you. >> ifill: still to come on the "newshour": primary election results; getting rid of gulf oil waste; emergency aid for pakistan; cyber security threats and food as metaphor. but first, with the other news of the day, here's hari sreenivasan in our newsroom.

>> sreenivasan: a federal jury in chicago told the judge they are deadlocked in the corruption trial of former illinois governor rod blagojevich. the jurors cannot reach agreement on any given count. the judge is now asking them to clarify what that means. blagojevich has denied charges he tried to profit from his right to pick someone to fill president obama's former senate seat. gunmen in iraq killed eight soldiers today by using children to lure them into a trap. the insurgents killed three adults in a house, in diyala province. then, they sent the surviving children to a nearby checkpoint to get help. when the troops arrived, the gunmen blew up the house. the death toll from weekend flooding and landslides in northwestern china has topped 1,100. chinese troops and rescue teams combed through hardened mud and debris today, searching for more than 600 people still missing. crews also sprayed the disaster zone with disinfectant to prevent the spread of disease. forecasters are predicting more heavy rain in the coming day, which could touch off new landslides. in russia, wildfires threatened

to unleash radiation from the chernobyl nuclear disaster in 1986. it was the latest danger in a disaster that shows no sign of ending soon. we have a report narrated by jonathan rugman of "independent television news." >> reporter: russia's forests are the biggest in the world. and now they are on fire in the hottest summer here since records began. sparking widespread anger at how this emergency has been handled. for it was only in week three of this crisis that the army was called in to help put out some of over 25,000 separate fires burning across the country outside the village of petrushino just 30 miles from moscow, people fought the flames on their own for more than 10 days before the military arrived. >> ( translated ): we were fighting together. men, women, old and young, even datcha owners. we were scattered in the fields and woods using whatever tools we had. shovels, axes, saws and buckets

of water. >> reporter: today, officials confirmed that fires have spread to forests contaminated by the chernoblyl disaster in 1986. the soil there is radioactive and particles could become airborne in billowing smoke. though officials claim they are mounting extra firefighting patrols and that there is no cause for panic. the drought is expected to ruin up to a third of russia's wheat harvest. and could cut $15 billion from the country's overall economic output. >> sreenivasan: a tropical depression in the gulf of mexico lost strength today, and forecasters said it could dissipate. for now, though, a tropical storm warning was in effect for much of the gulf coast from destin, florida to intracoastal city, louisiana. as a precaution, crews at the oil spill site stopped drilling a relief well until the storm passes. former congressman dan rostenkowski died today at his home in wisconsin. the chicago democrat served 18 terms and chaired the powerful ways and means committee.

during the reagan era, he was the leading architect of congressional tax policy. but he was defeated in 1994, after being charged with misusing government and campaign funds. rostenkowski later served 17 months in prison for mail fraud, but president clinton pardoned him in 2000. dan rostenkowski was 82 years old. those are some of the day's major stories. now, back to jim. >> lehrer: now to politics-- primary results from four states last night produced more clues about the shape of 2010 midterm election season. ten weeks out from election day, voters on tuesday gave both the president and the tea party alike, something to smile about. the marquee race was in colorado, where democratic senator michael bennet beat former state house speaker andrew romanoff to win the nomination. bennet was appointed last year, after ken salazar left the senate to become interior secretary. president obama had endorsed bennet, while former president clinton endorsed romanoff in the hard-fought primary race.

bennet's eight point win was a piece of good news for a beleaguered white house. >> the president was proud to lend his name, appeared in mailings, ads, participated in teletown hall. >> lehrer: but with the democratic primary behind him, bennet would not commit today to have mr. obama back to campaign this fall against a republican opponent. >> we'll have to see. we'll obviously do what's right for the campaign. he's been a huge help and i appreciate his endorsement. and we'll see what happens between now and november. >> lehrer: bennet will face republican district attorney ken buck with ties to the tea party movement. he claimed the mantle of outsider in beating former lieutenant governor jane norton. >> republicans have been sending their elected officials back to washington d.c. to change

congress, and instead those republicans have been changed by congress. >> lehrer: in fact, buck's win was one half of a big night for the tea party in the rocky mountain state. the other half was businessman dan maes and his upset win over former congressman scott mcinnis to take the republican nomination for governor. maes will face denver's democratic mayor john hickenlooper and a third-party candidate, former congressman and anti-immigration crusader tom tancredo. a republican gubernatorial primary run-off in georgia featured another proxy fight between national political figures. there was karen handel, backed by sarah palin. >> it's time to bring it on georgia! >> lehrer: and former congressman nathan deal, endorsed by two other potential presidential contenders, newt gingrich and mike huckabee. handel conceded the tight race today, clearing the way for deal to face democratic former

governor roy barnes. in connecticut, republicans nominated linda mcmahon for the u.s. senate she's former head of world wrestling entertainment. >> linda mcmahon said she wouldn't take money from special interests either. well, how much did she take? not a dime! >> lehrer: in fact, mcmahon spent more than $20 million of her wrestling fortune in the primary. she'll take on long-time democratic attorney general richard blumenthal to fill the seat of retiring democrat chris dodd. and to "newshour" political editor david chalian. now there are themes to be read into these results, beginning with colorado. let's start there. >> yes, the democratic senate race in colorado, as you said there in the piece, jim, very welcome news at the white house today because they avoided the headlines of the obama political operation is out of sorts. they won one here and won it big by eight points. they backed michael bennet, and they needed a win here

over andrew romanoff, the bill clinton-endorsed candidate. i do think there is an ability for barack obama , a chance for him to show i have some political mojo don't count me out. i'm not on the mat. but that's within the context of a deemt primary fight. that's very different than the general election contest, and that's why you heard michael bennet on that morning show this morning not saying, hey, here's the date i'd like to invite barack obama back to colorado this fall. he started keeping his distance because now he has to appeal to the broader electorate in colorado where barack obama 's not nearly as popular as he is inside the primary election. >> lehrer: is it conceivable he could get away with, that turning his back on obama now? >> i don't think necessarily he will turn his back. he vote forward the health care bill--. >> lehrer: he will just be very busy. >> he will just be very busy. the president will have other playings to be. >> lehrer: on the republican side in the senate race. >> this is the other big stheem, i think, of the night overall, and we saw it here in the senate race on the republican side

, ken buck was a tea party-backed candidate and upended jane norton, the former lieutenant governor there. this is the third senate race now where we have seen a tea party-backed candidate, somebody who ran to the right, sort of embraced the tea party energy, and actually emerged the nominee, even though they were not the preferred pick of washington republicans. we've seen it in nevada with sharon engel, and in kentucky with rand paul, and now we've seen it with ken buck. we has run to the right but still has a lot of mainstream credentials in his repertoire. this is by no means all of a sudden he's way-out, far-right, out of the mainstream in colorado and the contest is over. this will be a hard-fought battle. but democrat are hopeful they got the better republican candidate, the one that is more easily defeated because of the tea party ties. >> lehrer: buck versus bennet is going to be a careful race to watch. >> no doubt about it.

it is a key state, colorado. it will be a battleground state in the presidential. we have seen it tip to both parties in recent years and this senate race will tell us a lot in november about where the country is. >> lehrer: the colorado governor's race is also interested? >> right. this one may actually be a lot easier for democrats now. dan maes, also a tea party-backed candidate , won against scott mcgins, as you mentionedly in the pierce, the former congressman. here's what complicates the governor's race for republicans-- the third-party candidacy of tom tancredo. now the conservative vote will be split on the right between maes, who has never run before, and tom tancredo. himmen looper looks like he has an open shot to keeping the gubernatorial seat in democratic hands this fall. that would be bad news for republicans who are looking, of course, for colorado to come back as a really solid

republican state both ways. >> and remember, we're going into a redistricting here year because of the census numbers so the gubernatorial contests in these key states are very critical, not just for next year but the next 10 years in setting up the political cycle. one told me with dan maes as a nominee is a nightmare scenario for the republicans. >> lehrer: on to georgia, and the endorsements, the sarah palin endorsement, fit that into what happened last night. >> when we were talk this morning, i didn't know we would have a result to talk about. but karen handel was the backed candidate by sarah palin and she just came up shot, about twrif00 votes and she conceded today and is not going to call for a recount. this is a big test for sarah palin. we're seeing a mixed record for candidates she has endorsed. a lot of house candidates have not prevailed. today, she lost this one.

about two weeks ago in the kansas senate primary she also backed the losing candidate. so she really has a mixed record at this point. >> lehrer: isn't it interesting the palin endorsement tally is important right now. why is that important? >> oh, well, first of all, just the fascination factor with all things sarah palin. but because she has a real following, especially on the-- in the right wing of the republican party, and that's the wing that usually drives primary elections, and so you watch her to see is she activating a base so much that in a primary she can have a real impact? like i said, if we're seeing mixed rilts-- one republican congressman in georgia jack kingston said i wish she would have stayed out of this contest. sarah palin seems to be dividing our party when we need to be united. he was not pleased when she got involved. >> lehrer: connecticut the victory in the republican primary of linda mcmahon in the senate race. what-- how do you read that? money? >> no doubt it's 99.

she'll be one of the most colorful characters because of her past as c.e.o. of world wrestling entertainment. this is a case of money here. she poured $22 million of her own money into this race. she's willing to spend another $30 million and in the general election contest against blumenthal, the attorney general there, on the democratic side, she was 30 points back from blumenthal in the polls, just a couple of months ago. she's now 10 points back. money is having an impact and this will be a race to watch. >> lehrer: let's go to some other things in politics. it was announced yesterday the -- i think it was the department of labor, that some of these republican governors who had refused-- or said they were going to refuse it take federal stimulus money turned out, particularly in south carolina, they did it quietly anyhow. >> this is one of the great stories of what a difference

a year mack, and mark sanford, the governor in south carolina, of course. when he was first leading the charge amongst republican governors to not take unemployment funds in the stimulus bill, it was when he was still very much considering a run for the white house in 2012. obviously, after a walk down the appalachian trail and his own problems, personal problems with his marriage, that-- those chances for a white house run have dissent sgratd right now we've learned he's taking tens upon tens of millions of stimulus dollars. he very quietly a couple of months ago arranged for this to happen , unemployment money coming in to prop up the diminished unemployment funds in south carolina. >> lehrer: it turns out a couple of other governors did the same thing. yes, although they're doing it-- explaining about some of the recent stimulus money, not the big stimulus bill that has passed. we've seen mitch daniels in indiana and governors complaining about the additional spending congress has been doing but putting it to use. >> lehrer: quickly, wilbur ross died. another

giant of the congress, former senator ted stevens died today. both had hard falls , but here they are as a matter of history, on both sides of the dger. >> there's no doubt their legislative legacies are intax. they were chairman and leaders and longtime members of the house and senate, but of course they both new their befores would be written with remarks about ethic scandals that brought an end to each of their careers so that has been what tainted their long legislative record. >> lehrer: all right, david, thank you. >> ifill: now, to the continuing cleanup along the gulf of mexico. the government's point man on the oil spill-- retired coast guard admiral thad allen-- announced today that he plans to step down by the end of september once he's satisfied with recovery plans. no oil has leaked since mid- july.

but there are questions about what to do with the thousands of tons of waste the disaster generated. "newshour" correspondent tom bearden filed this report from the coast. >> reporter: when the macondo oil well blew out on april 20th, bp hired tens of thousands of people to work on containing and cleaning up the largest oil spill in history. hundreds of ships skimmed off the surface oil. workers in protective gear scooped oil off beaches and put it in plastic bags. hundreds of miles of floating and absorbent booms were laid down to protect the coastline. with the well capped, all of that stuff-- 46,000 tons of solid waste and about 13 million gallons of liquid waste-- have to be disposed of. booms, for example. a lot of them end up here, at the port in theodore, alabama, not far from mobile. this is the largest single decontamination site along the gulf. booms of all sizes are pressure-

washed and treated with bleach to remove oil and bacteria, repaired, and stacked for future use. walt dorn works for patriot environmental, b.p.'s contractor, to do the work. he says the whole facility is designed to keep the waste contained. >> we have a 30-inch containment barrier all the way around and it's a non-permeable liner underneath, so it cannot leak any liquids. all the liquids that are generated during the cleanup process due to pressure washing and rinsing of the equipment is captured inside this pool and again you can see behind me the large trucks. these are vacuum trucks that actually recover all of that liquid material as it comes off. >> reporter: and then there's the oil itself, mixed with sea water, that is being offloaded from large skimming ships. after the two liquids are separated, the oil will be processed into fuel, and the water is sent off site to be treated. solid waste, like contaminated protective clothing and booms that can't be recycled are sent to industrial landfills. those facilities accept all kinds of household and industrial waste.

they have heavy liners and systems to collect and monitor seepage. there is a detailed plan for all of this, scrutinized and approved by federal and state agencies. the environmental protection agency doesn't classify oil waste as hazardous. but it is testing the material and making b.p. test the waste weekly to make sure that more dangerous material hasn't been mixed in. mike mcanulty is waste management coordinator for b.p. in the mobile area. >> there is a continuous testing process. the epa tests waste from our on a weekly basis. >> reporter: and so far nothing has emerged from that testing process that leads to any concern. >> there's nothing to indicate this waste is anything other than non-hazardous. >> reporter: louisiana state university professor john pardue agrees that the oil that reaches the shore is not particularly dangerous. >> oil itself has some toxic components but the oil that's reaching the shore line has largely been weathered. it's gone through evaporation processes, biodegradation processes, dissolution

processes. and so what's coming on shore really is the, we call it an emulsion, which is a mix of oil and water. it is probably the consistency of peanut butter, wet peanut butter floating around in water. and it, it obtains this consistency and it mixes with water, but also it loses its more volatile fraction. >> reporter: but not everybody believes all the reassurances. people here in harrison county, mississippi, people complained so loudly that b.p. decided not to store oily waste in their landfill. but before b.p. gave in, it buried about 1,400 tons of waste here, even though the county government was on record as opposing the shipments. marlin ladner is a county supervisor. >> i think it was a slap in the face to folks in harrison county. b.p. dumped their waste on our beaches possibly in our bays, in our estuaries and in our marshes. picked that waste up and haul it less than four miles north and place it in our ground and our landfill. i often use the analogy that its like somebody were to dump something in your front yard that you had a problem with. you call them, they come and

pick it up and apologize, but rather than taking it off, take it around to the back of your house and dumping it in your backyard. >> reporter: now dozens of previously shipped containers are awaiting transfer elsewhere. ladner says there are just too many unknowns to risk something leaking through the liner and contaminating the aquifer that sits below the landfill. that acquifer is the only source of freshwater for thousands of people who live all around the landfill. >> we don't know what the long term effects of that oil is in that landfill and i think when you don't know for certain about something, you need to err on the side of caution and when you're talking about peoples people's water, i think you need to be very concerned about what you put into those landfills. >> reporter: rene faucheux works for waste management, the company that runs the landfill. he says ground water is tested twice a year and that the law requires continued testing for 30 years after the landfill closes. >> that's correct, the waste is, is a non-hazardous waste. uh, it's permitted for this facility.

it can be handled very well with, with an environmentally sound operation. >> reporter: so why didn't the local folks who live around here believe that? >> i do think that there is some information that probably could be shared more effectively regarding the non-hazardous waste parameters of this waste. but it is waste that is handled the same way between florida, mississippi and alabama and louisiana. >> reporter: casey demoss roberts works for an environmental group in new orleans called the gulf restoration network. she doesn't trust anybody involved. >> look what they've done. why would we trust them? i mean, there has been failures up and down the line at every level and certainly the industry hasn't been keeping themselves accountable, and the government, m.m.s. certainly wasn't doing their job in regulatory or even collecting their revenue correctly. >> reporter: so far, harrison county is the only community to successfully resist b.p.'s disposal plans.

the decontamination site in theodore, alabama is now operating at peak capacity and expects it will have enough waste coming in to be busy at least until the new year. >> ifill: after three weeks of flooding that have devastated much of pakistan, the united nations today launched an appeal to raise almost $460 million in international aid. the deluge, driven by severe monsoon rains, has affected more than 14 million people. at least 1,500 have died and nearly 300,000 homes have been damaged or destroyed. for more on the global aid effort, we turn to john holmes, the united nations' under- secretary general for humanitarian affairs and emergency relief coordinator. welcome. mr. holmes, mr. secretary, what can you tell bus this casualty count?

it keeps shifting, and it only seems to go up. >> i think the casualty count is probably lower than it should be at the moment at 1500. i think it's very difficult to know in all these thousands of villages that have been washed away exactly how many people have died. in fact, given the size of the disaster, the casualty rate, the death rate, is relatively low. what we're most concerned about-- because, obviously, we have to concern ourselves with the living more than the dead in terms of help-- as you say, 14 million people, maybe even more than that, have been affected by this, and this is far more than most disasters, far more than in the haiti earthquake or the tsunami, for example. that means we have at least half of those people very badly affected and need immediate humanitarian relief. that's why we've launched this appeal today for $460 million which is just for the immediate priorities of food, clean water, shelter, tents, and plastic sheeting, and, of course, medical assistance because our

biggest fear is water-borne disease diarrhea, cholera, whatever you want to call it-- may start to spread and cause a greater death toll among survivors. >> ifill: you're talking about people affected by loss of their livelihoods, their homes and perhaps disease as well. >> exactly. i mean 14 million people is such a large figure it's quite hard to imagine but you have to look at this on an individual level and think there are 14 million people who have lost everything. they've lost their village, their house, possibly some of their relatives, are their agcult rap land, their crops. that's why they need immediate humanitarian relief, not to mention, of course , in the median term and longer term the damage to infrastructure is absolutely immense. the need to restore agriculture is huge if we're not to face a food crisis further down the line. what we're talking about here, the $460 million we're asking for from governments around the world, is only just the first step for the next few weeks.

>> ifill: what has happened so far in terms of relief that has gotten to people in these remote areas? s that been led by the u.n.? has it been led by individual nations, by the pakistani government? >> the pakistani government themselveses of course have in the lead and they've been doing a lot of hard work trying to rescue people and evacuate those in front of the floodwaters. let us not forget that this is not a disaster that is over. it's continuing as the floodwaters move into the central and southern region of pakistan. we may face much bigger problems even than the ones we have today. the pakistan government has been in the leada they should be. and the big n.g.o.s, world vision, oxfam, save the children, concern, and others-- are work very hard on the ground. we were already there, of course, because conflict between the taliban and the government of pakistan whiches had led to a lot of displacement in the northwest. now the reality is there are

hundreds of thousands of people, millions of people we have not reached yet and cannot reach at the moment because they're inaccessible. bridges are down, roads are down, dams are being threatened. the infrastructure is extremely poor it start with but it irreparably damaged by this disaster, and that means reaching them is a huge challenge for us for the future. >> ifill: you talk about the conflict in the region, which we talked about so much on this program, there have been reports that the taliban actually got to the scene faster, representatives of organizations linked to the taliban, and they are providing the kind of aid which might prove to be an obstacle for western rescuers, if you know what i mean. >> well, i can understand the concerns about that. our concern from a humanitarian point of view is simply to make sure that aid reaches the people who need twherever they may be, whether they're in areas controlled by the taliban or areas controlled by the pakistani government. the conflict does pose some security problems for us in terms of reaching some of those people. for example, in

the swat valley as you mentioned. our main concern is not who gives the aid but people should get the aid and get it very quickly. i think what we need to understand is this is a disaster of an enorms magnitude, a scale of which we're only just beginning to comprehend even now, and that's why we're launching this appeal with such urge urgency and hoping governments and also people will respond and believe us when we said the aid that they give us will reach the people who need it and will reach it quickly without being divert on the way or being lost, for example, in corruption. it's very important for people to understand that. >> ifill: how do you persuade people of that? there have been so many reports of corruption in pakistan, and it is unclearue just raised the question of security because of the presence of taliban on the ground. how do organizations, nations, corporation, individuals know that if they contribute to this relief plan that it's even possible for the aid to get through? >> well, of course, we will not

try to deliver aid. it is impossible to do so. this aid goes direct to u.n. organizations, the world food program, high commissioner for refugees, the world health organizations, all the big n.g.o.s i mentioned earlier. it goes straight to them and straight from therj possibly involving some local n.g.o.s on the ground who we have faith in and straight to the people who need help. it doesn't go through the government, and some of the problems which might be associated do not apply in this case of immediate humanitarian aid. that's why i say people can be confident the aid will reach the people who need it. >> ifill: briefly, three weeks now into this disaster, any end in sight? >> not at the moment. as i stay say, the water is still coming down in very large qaunt in some of the main rivers and some of the dams are threatened by the sheer volume of water which would create a bigger disaster and the monsoon season is very far from over. to terrible rains may make

the situation worse yet. we expect number needing humanitarian relief to rise further. >> john holmes, thank you very much. >> lehrer: next tonight, part two in our series on computer security. "newshour" correspondent spencer michels interviewed a man who knows a lot about the subject. >> reporter: if you could play he served on the national security agency. today, hayden works as a security consultant and teaches at george mason university. he spoke at the recent black hat convention on technical security in las vegas. we caught up with him after his speech. general hayden, thanks very much for being with us. >> thank you, spencer. >> reporter: general, there is a debate going on in this country as to how serious the threat of a cyber attack is. some people say it's

really serious and others say it's really not. where do you come down on it? >> i'm reluctant to use the word "war." i know some of my good friends whon this very use that phrase. here is how i would choose to describe it. we created this new domain, this new space called "cyber," and, frankly, it's lawless. there are no natural technical barriers up there to protect information . that's why all of us are kind of-- have to assume a personal responsibility for firewalls. i mean, when was the last time any of us have been asked to defend ourselves personally in any other space except cyberspace. >> reporter: but is there a serious threat and what is it? >> because it is so anarchic-- there are a variety of actors out there in that do not have your best interest in heart. there is actors out there stealing state secrets-- other nations interested in

doing their espionage thing. and, frankly, in cyberspace , something valuable to you may be of interest to them in ways none of us could imagine five or 10 years ago. you've got anarchists out there who just want to destroy thing. you have potential terrorists throughout who just want to do harm. and finally, you've got criminals. the modern-day bank robber isn't speeding up to a suburban bank with weapons drawn and notes passed to the teller. he's on the web taking things of value from you and me. and they're all taking advantage of what is essentially an antarctic out there-- an,y out there. >> reporter: especially is one thing, but actually, launching a cyber attack, defeating the power grid or the water system in a whole country, or shutting down their internet. that's an attack. that's war. >> and that's a good way of putting it.

we've too fasly throw the label "attack" and "cyberattack" on the american side. when we talk about cyber activity in other places, when we say something has been attacked, it means you have to have done something to somebody else's network . you've have to degrade information, deny access to information , corrupt his information, delay his information or destroy his information or destroy his network. that's when we mean by "attack" in the professional view. >> reporter: is there a big threat of that? >> i think there is. all right. there are state actors out there who can do this. >> reporter: well, we're one of them, right? >> actually, there was a survey done not too many months ago and they asked the citizens of some cyber-savvy nations around the world, "who do you fear most in the cyber domain?" and quite interestingly, we were number one. the chinese were a close second, but we were number one, which i think is simply a reflection that we are a

technologically agile country and we have very good intelligence services and the rest of the world is kind of responding to that reality. >> reporter: so have there been cyber attacks? there have been reports of them-- israel-syria situation, and georgia and estonia. are those cyber attacks? >> they are. and we've seen them. they've actually been fairly unsophisticated, the ones that i'm going to point out to you. the cyber attack against georgia in 2008, the attack against estonia, those were denial of service attacks. those are kind of brute force attacks that just overwhelm a system, overwhelm a server and prevent access to web sites. i mean, they're destructive, obviously, but i guess the point i would like to make is you don't have to be very sophisticated to do, that which makes it even more dangerous. >> reporter: what about an attack on a country 's infrastructure as we talked about or water supply or electricity

grid? is that in the cards? >> those kinds of systems, the controls, the critical pieces of infrastructure, yeah. they are vulnerable to attack. >> reporter: is there a defense against a cyber attack? >> by the nature of the internet, the advantage goes to the offense. we've built the internet in such a way that it's very hard to defend it. it's built on openness. it's built on access. it's b.on agility. none of those things help the defense. >> reporter: is it possible? >> it's possible to make our target s less attractive than some other targets. it's possible to make it more expensive for an adversary to do it. it's possible to kind of push off the playing board many adversaries because we made our defenses so good they can't attack us , can we make it so good no one can attack us? probably not. but we can reduce the chances of damage. >> reporter: should the united states be negotiating to reduce these threats when in fact the u.s. may be the strongest in this whole field?

>> if you take the equation that we are the most cyber-capable nation in the world tdrives you towards one conclusion. if, on the other hand, you admit that we have the most to lose in cyberspace , compared to the rest of the world tmight drive to you another conclusion. and that's why i think we are beginning to see now general alexander at cyber command, our department of state, are beginning to suggest that it's time to begin some international dialog on cyber questions. >> reporter: this is a very technical issue. do you think that policy makers who aren't up to speed technically can actually make policy about this? >> policy makers can, are they there yet? probably not. some of them certainly not. and that's really the issue. the technology and the operational art of this thing in cyberspace is way beyond any of the policy lines that we've even begun to think about.

policy has to catch up. that's going to take a lot of work and a lot of conversations between tech savvy people and policy smart people. >> reporter: so there are a lot of things that are really unknown in all this is sounds like. >> absolutely. >> reporter: we've got a long way to go. >> we do. i wouldn't be discouraged. i mean we are not far into this. where are we in our second real decade of cyber domain being so ubiquitous? on the other hand it's growing so fast we don't have any time to waste. >> reporter: general hayden thank you very much. >> thanks very much. >> ifill: finally tonight, food as metaphor for a country's financial difficulties. "newshour" economics correspondent paul solman took a break from reporting on greece's serious problems to explore that idea. >> reporter: on our recent trip to greece, we broke bread with a native new yorker who's lived in the old country for nearly 20 years.

>> welcome to the greek diet. >> reporter: diane kochilas writes cookbooks, reviews restaurants, runs a cooking school. and, to begin, can i interest you in some ouzo? >> some ouzo, sure. >> reporter: and she has a foodie's perspective on the recent economic history of her adopted land. >> the toast that people were clinking glasses to over the holidays was ( speaking in greek )-- health and liquidity, or health and cash flow. >> reporter: to health and cash flow. kochilas first lived in athens in the early '80s, just after greece joined the european union. it was a time, she writes, of cheap neighborhood tavernas. but by the time she returned for good in 1992. >> the neighborhood taverna just wasn't enough anymore. >> reporter: traditional greek cuisine was disappearing, replaced by... >> pacific rim restaurants, italian restaurants. >> reporter: ah, globalization. >> globalization, and there was a lot of money coming into the country from the european union. >> reporter: this is the new frontier in which to invest. >> right, at that time these huge cavernous restaurants were opening, you know, over-designed with a lot of expensive food without much substance. >> reporter: so what's an example?

>> i ordered a piece of fish. a filet of fish came on a plate, and the garnish was a huge rock! >> reporter: not a good omen, considering the rock-and-a-hard- place economy that is greece today, partly a result of even further globalization, when greece dropped its own not-so- stable currency, the drachma, for the dependable euro in 2001. >> and kept borrowing, in order to be part of this sort of social revolution. >> reporter: now, there were some good things happening too. greece hosted the 2004 olympics- - a time of national pride and a return to roots on the playing field, and in the kitchen, with neo-greek cuisine. >> here's an example of a dish like that. loukoumades. that's a very traditional dough fritter, usually served with honey and nuts. this is actually a sweet and

savory variety of that, filled with cheese. it's a take on tradition. >> reporter: the problem, says kochilas, was that some chefs now took tradition to a new place entirely. a place of excess. >> you had things like freeze- dried feta cheese. one of the worst things, if not the worst thing i have ever tasted. you had greek salad in the jello cubes, greek salad with feta cheese foam, greek salad with kalamata olive foam. >> reporter: foam, kalamata olive foam? >> foam. air. people were serving artichoke air, which is not something ( laughs )... >> reporter: right, right. >> something even lighter than foam. >> reporter: so, this is the period in which the rest of europe and other parts of the world are now lending to greece because greece is on the euro, and so... and interest rates are very low, so no reason not to borrow.

and people were running up their credit cards. >> buying air. >> reporter: buying artichoke air. >> hot air, buying hot air. and then everything that's been puffed up, like artichoke air, deflated. and that's what we're living now. >> reporter: in retrospect, says kochilas, greece had forsaken its traditional cuisine, its traditional values. and whatever had become bloated from public spending to private borrowing to haute hellenic cooking is now on a strict diet. >> so, here's a typical greek salad. >> reporter: so, tomato. >> tomato, feta cheese, your protein. >> reporter: uh-huh. >> a little bit of bread, your starch. green. you know, a lot's going-- olive oil, of course. it's authentic, it's nutritious. it's humble. and it's delicious. >> reporter: are you suggesting that greece might be actually better off going through this traumatic contraction? >> i'm not an economist and i'm not a proponent of shock therapy

and my heart certainly goes out to people who are going to lose their jobs. but i do think that a return to basic values and to a sense of who we are as people can only be for the better in the long run. >> reporter: and with that, a final toast. >> ( speaking greek ) which means when you're going broke it's best to have a great time. ( laughs ) right? >> reporter: i'll drink to that. diane kochilas, thanks very much. >> thank you very much. >> lehrer: again, the major developments of the day: wall street had a rough day after the federal reserve lowered its forecast for economic growth. the dow jones industrial average lost 265 points. and the u.n. appealed for the "newshour" is always online. hari sreenivasan, in our newsroom, previews what's there.

hari? >> sreenivasan: gwen and david did a debrief on this week's primaries and more earlier today on "the rundown." it's part of a new weekly video feature from the political beat. and you can explore a map of landfills in the gulf region where oil waste is being deposited, and read a blog post from tom bearden. plus on paul solman's "making sense page," you can watch his other reports from europe and find a follow up to his story on the plight of the so-called 99ers, who've been out of work for over 99 weeks. read viewer reactions and hear more from the 99ers themselves. all that and more is on our web site, newshour.pbs.org. >> ifill: and that's the "newshour" for tonight. on thursday, we'll look at guarding against crime online. i'm gwen ifill. >> lehrer: and i'm jim lehrer. we'll see you on-line and again here tomorrow evening. thank you and good night. major funding for the pbs newshour has been provided by:

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